FOREIGN DIRECT INVESTMENT IN TURKEY IN THE FRAMEWORK OF CANDIDACY TO THE EU

Abstract

Although the level of FDI exceeded that of the previous decade, throughout 1990s Turkey felt behind the rest of the world. The paper, from the theoretical perspective and also by using the results of the interviews with foreign businessmen in Turkey provides some insight into the reasons for the lack of FDI in Turkey. The views of the foreign investors are investigated for the motives of FDI, for the characteristics of the investment environment in Turkey and also for the role of the government to promote FDI in Turkey. The results of the interviews show that country specific factors are of greater importance in the foreign firms ' decision to invest in Turkey and that the government has an important role in maintaining economic and political stability, in improving Turkey's negative image abroad and in providing effective investment incentives. The relationship between FDI and Labour markets in Turkey, Inflation in Turkey, and Trade Policy in Turkey are amongst the other topics investigated. The views of the foreign investors regarding the growth potential of the country in the region as well as the effects of Turkey 's Customs Union and possible membership to EU are also sought. The paper comments on the internal and external reasons behind the inability of Turkey in attracting FDI and the factors that need to be changed for Turkey to attract FDI.